Technology-Led Decline in Share Prices

July 22, 2015

Equities fell 1.6% in Australia, 1.2% in Japan and Hong Kong, 1.0% in Taiwan, 0.9% in South Korea, 0.4% in Singapore and 0.2% in China.  India’s market, an exception in the Pacific Rim, rose 1.2%.  Share prices have also fallen 0.5% in Switzerland, 0.4% in Germany, 0.3% in France and 0.1% in Britain.

Commodities extended their 13-year low.  Gold fell another 0.6% and below $1,100 to $1094.20 per troy ounce, while WTI crude oil sank 1.1% to $50.30 per barrel.

The dollar is narrowly mixed, with losses of 0.3% against sterling and 0.1% versus the yen and gains of 0.3% relative to the loonie and kiwi, 0.2% vis-a-vis the euro and Aussie dollar and 0.1% against the Swiss franc.  The yuan is unchanged.

Ten-year sovereign debt yields fell four basis points in Britain and two bps in Germany but edged up a basis point in Japan.

Minutes from the Bank of England’s July Monetary Policy Committee meeting revealed another unanimous vote for unchanged policy settings.  While observing enhanced global uncertainty, the minutes found current settings to be appropriate for achieving the proper inflation path.  Future policy changes are to be data driven.  Private speculation is mounting that the Bank of England will raise interest rates later in 2015.

Australian 2Q15 consumer price data showed less total inflation than forecast.  On-year overall consumer price inflation of 1.5% was above 1.3% seen in the second quarter but less than 1.7% in the final quarter of 2014 and 3.0% in 2Q14.  Among measures of core inflation, the trimmed mean index fell back to 2.2% from 2.3%, and the weighted median stayed at 2.4% for a third straight quarter. The trimmed mean and weighted median were marginally above expectations.

The Westpac index of Australian leading economic indicators was unchanged in June for the second time in three months.  Such had fallen 0.3% in March and 0.1% in May.

The Conference Board announced a 1.0% rise in China’s index of leading economic indicators in June, somewhat less than May’s advance of 1.1% and more considerably below April’s 1.5% increase.  The index of coincident Chinese economic indicators climbed 0.4% after a gain of 0.5% in May and a drop of 0.7% in April.

The MNI Chinese business indicator, a gauge of sentiment, conveyed a different signal, plumbing to a 6-year low, falling to 48.8 in July from 53.5 in June.

Three Japanese indicators were reported.

  • The all industry index, a monthly supply-side proxy of GDP, fell 0.5% in May.  The April-May level was 1.0% below the 1Q mean, thanks to declines of 1.4% in industrial production and 1.0% in service sector activity.  The all industry index was 0.4% weaker than in May 2014.
  • Japanese supermarket sales on-year growth slowed abruptly to 0.3% in June from 5.7% in May.
  • On-year growth in machine tool orders was confirmed at the preliminary estimate of 6.6%, down form 15% in May, 10.5% in April, 14.9% in March and 28.8% in February.

South African consumer price inflation ticked 0.1 percentage point higher to a 6-month peak of 4.7% in June.

French manufacturing business sentiment improved to a reading of 102 in July from 100 in June, while service sector business confidence also went up two points, reaching a score of 97.

Italian industrial orders plunged 2.5% on month in May, the most in four months, and were 0.5% lower than a year earlier.  Italian retail sales were merely 0.3% higher in May than a year before.

Irish PPI inflation held steady at 6.3% last month.  Icelandic wage inflation accelerated to 7.1% in June from 5.3% in May and 5.2% in April.

Investors await the FHFA U.S. house price index, existing home sales, and the Redbook weekly chain stores sales index.  Mexican retail sales and Brazil’s current account also arrive today.  Greek’s parliament votes on the third bailout package.

Copyright 2015, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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